Wednesday, May 31, 2017

The odds of stagflation eroding and gradually destroying the buying power of the average consumer in coming years is more likely than many people realize. Too many people little difference exists between stagflation and inflation, however, the distinction or difference is that stagflation is often linked to times of economic slow growth. The idea that inflation cannot exist in a period of slow growth is a myth that many people believe, this may soon be proven false. A great deal of what something is worth is related to where people actually put their wealth. The sectors or areas of the economy that savers and investors deem safe are more important than most people realize.

Price stability or even minor deflation should not be a major problem but due to the fact we seek to move upward and ever higher adds to the idea the 2% inflation target deemed as a desirable rate by most central banks is the economic sweet spot. The concept a little inflation is a good thing appears to be based on the idea it adds to the illusion of overall economic growth. This arbitrary number or target also gives central banks far more flexibility in defending a policy that results in printing fiat money (currency which derives its value from government regulation or law rather than backed by any commodity) as well as deficit government spending.

For years savers have poured a great deal of their savings into paper promises such as pensions, bonds, stocks, and such. Using a slew of faulty methods to compute inflation we are constantly informed consumers are not losing a great deal of buying power, however, these methods often underweight important necessities and overweight the cost of televisions and other electronic gadgets that are falling in price. Even low-interest rates feed into this false narrative. If you want a better picture of what is actually happening focus on the replacement and repair cost that occur following a storm or other natural disaster.

Venezuela Is Poster-Child Of Economic Chaos

When it comes to economic policy it seems, sustainability is put on the back burner and the goal is just to create growth tomorrow, or in other words, full speed ahead. Our leaders find strong allies with the lobbyist who grease the wheels of commerce. A society where consumers conserve, reducing waste, and any talk of austerity usually conflicts with the goals of lobbyist hell bent on creating growth at any cost. In many cases, austerity measures have been associated with public protest and claims of a significant decline in the standard of living. The argument by contemporary Keynesian economists that budget deficits are appropriate when an economy
is in recession encourage governments to try to spend their way out of trouble.

What we should be asking is if current policies are really creating tangible and solid growth and question if they are sustainable over time. Those touting the destructive force of deflation often use Japan as an example of what we should avoid at all cost. It could be argued that the so-called "lost decades" that Japan has experienced is the result of other factors rather than the country not adding enough stimulus. The fact is after its massive bubble burst Japan never really faced its demons and chose to keep alive zombie banks and companies coupled with increased competition from China as it began to export low price goods to America as well as dreadful demographics are all contributors to Japan's problems.

We should remember that Japan's economy is driven by exports this alone makes it a far different animal than our economy. In truth Japan has not fallen off the face of the earth as its real estate and other markets fell back to reasonable levels. Until now because of their low interest rates the yen has been a
favorite of those playing the carry trade game and is still seen by many as a
safe haven currency. The problem they now face is at some point because of the governments unsustainable deficit the world will at some point declare the yen as worthless and the inflation they have sought for so long will wash over them taking with it much of their buying power.

Monday, May 29, 2017

Mosul's transformation into a pile of rubble filled with the bodies of
dead civilians nears completion. The destruction of Mosul continues, and
as the end nears we are now seeing Mosul back in the news. Several of
the news reports center around how victory is near at hand, this may be
so we are prepped for the celebration and ready to give credit to those
who are bringing ISIS to its knees. Over the Memorial Day Weekend on
Face The Nation, Defense Secretary James Mattis made it clear,
containment is not enough the goal is total annihilation and humiliation
so that nothing will rise from the ashes of ISIS.

Mosul and the surrounding area in
northern Iraq had in the past housed about two and a half million
people. Since being occupied by the Islamic State
of Iraq
and the Levant in June of 2014 many people have fled. Knowing that to
stay was to risk your life and the
lives of those with you the population today has declined to around two
hundred thousand. Adding to the woes of civilians that remain trapped by the fighting or afraid to flee are reports from U.S. based Human Rights Watch that Iraqi Kurdish
fighters battling the Islamic State have unlawfully destroyed
Arab homes in scores of towns and villages in what may amount to a war
crime, in short, your potential liberators may not be your friend.

The good news is that when the operation began to liberate the city
of Mosul and eliminate the last bastion of ISIS in Iraq things were moving
faster than many people had anticipated according to Prime Minister
Haider al-Abadi. Still, problems continued to surface slowing the advance, such as a wave of car bombs sent by the
Islamic State group. Iraqi special forces Maj. Gen. Sami al-Aridi said, "there
are so many civilian cars and any one of them could
be a bomb." As Iraqi forces try to advance further into Mosul these
suicide car bombs have taken a toll. With Islamic State militants even
deploying armed children in Mosul’s Old City as
means to bolster the impression they are still in control it is obvious
many more civilians will die before this is over.

Civilians, As Well As ISIS Fighters, Are Being Killed

Clearly, the once
great and ancient city of Mosul will be
reduced to nothing more than a pile of rubble. Mosul shares this fate
with many other cities in the region that have become war zones. Within
the slowly shirking kill zone, it is not difficult to
imagine 100,000 or more of the innocent people trapped within the city
killed as troops seeking to eradicate the last of the estimated four to
six thousand ISIS
fighters go about their task. Death often occurs rather
indiscriminately in such places and is dealt out to both civilians and combatants. In
this case, civilians will be used as human shields increasing the toll and carnage.

As for how those many tens of thousands of
civilians who fled fighting near Islamic State-controlled Mosul last
week many are now stranded outside the city without basic humanitarian assistance. The situation became so desperate near the end of last year it was reported that army
officers began distributing rations meant for their
soldiers and buying extra supplies with money out of their own pockets. We
have seen this all before, when the smoke begins to clear a campaign will develop to raise massive amounts of money to rebuild and set things right but
until then it is suffering and death and nothing we do will change this
reality of war.

An article written in the middle of November 2016 pointed out that a
matter that merits our attention has become merely a footnote lost in
the
noise of daily news, these are the events taking place as Iraqi troops
and a coalition of anti-ISIS forces try to retake Mosul. Even though
they are in different countries both Mosul and Aleppo stood in the path
of total destruction destined to be wrecked by the forces of
war. Aleppo was of course further down this path as we have seen in the
photos that have become far too common. These photos depict the total
devastation and death modern warfare brings upon those caught in its
way.

It should be noted the Mosul offensive began in mid-October 2016, in thedays
leading up to the American
Presidential election, at the time the offensive was expected to last
weeks, if not months. The media reports were spun to let us know a
forthcoming
victory was in the offing, it seemed this was done to assure voters
American foreign policy has
not been a dismal failure. The fact is Mosul should never have never
fallen. The blood and treasure wasted and spent in Iraq are in many ways
a reflection and the legacy of intervening where you don't belong. When
this campaign is over victory will be declared but what exactly will we
be celebrating?

Monday, May 22, 2017

Time has a way of revealing certain realities but does so at its own choosing. It is important that we remember the power of time, it controls us rather than the other way around. During certain periods of our lives the clocks often seem to be moving at their own pace. As a child the special days like Christmas approached slower than a turtle in peanut-butter, however, vacations had a way of slipping by far too soon. The fact that events seem to advance unevenly reinforces the concept of lag time where the effect is not rapidly apparent and the idea that at times we see life passing before our eyes. Time is a powerful force and will at its leisure remind us we are not in control, all things come to an end and so will this market and the economy it has wrought.

The book that I authored several years ago focused on how mankind has by way of its advancements constructed a world in which we are rapidly moving ever faster into a future that we only partially control. This brings me to the crux of this article and that is the catalyst of our economic demise remains in question. Over the years many articles have been written speculating on what will be our downfall and when we will stumble yet we have bumbled our way forward. A patch here and a patch there has allowed the flawed economic system the world has cobbled together to continue with the help of an emergency action every now and then. But has it been luck, cunning or skill that has brought us to this point?

When it comes to the economy we are not talking about a well-oiled and designed machine and in the end, we may find that it is not really completely under the control of those who have been placed in the driver's seat. At any rate, many scenarios exist as to how one or more missteps may lead to the collapse of this rather fragile contraption. As for taking a hands-off approach and allowing markets to find their own way, that time is long gone and that ship has already sailed. Over the years central banks across the world have become so deeply involved in manipulating and distorting markets they are at a point where true price discovery no longer exist. On occasion, I dust off an article that I feel hit some important cords and do so now.

Let the chips fall where they may is a figure of speech which means, "What happens happens" or "Let the imminent events unfold." Thismetaphorictermdates back to the 1800s and alludes to choppingwood, "chips" refers to chips of wood. This phrase uses the image of a person chopping wood and letting the chips fly everywhere instead of trying to be neat and chop on one side so they'll fall in a pile. It implies thewoodcuttershouldpayattention to themaintask of cuttinglogsandnotworryaboutsmallchips. It is often joined to a statementthatoneshould do what is right, such as, "No matterwhattheconsequences,I'mgoing, to tellthetruthaboutwhathappenedandletthings and events unfold as they may.

A Huge Number Of Chips

It has become abundantly clear that when it comes to the "economic chips" the powers that be have no intention of letting them fall where they may. However, several factors determine just how much influence can be applied to the how current economic policies unfold.Continuing with the metaphor of "falling chips." Things like the size of the chips, the rate or speed at which they fall, and the number of chips in the air may make them uncontrollable. My point is we could find ourselves up to our neck in chips in a blink of an eye and in the middle of an economic tsunami, all bets are off as to how successful efforts to stem a catastrophe might be. We should expect that during the final stage of a global shakedown events will be uncontrolled and become very wild.

Many people have come to accept the fact the world might soon witness a major shift in the value of one investment over another as investors seek firmer ground. Derivatives, currencies, plunging stock prices, air rushing out of a bond market bubble, how debts are structured, and the timing or direction from which problems arise are all factors that must be considered. Investors are constantly reminded that investing involves risk, investing in foreign markets is subject to additional risk including currency fluctuations. This means we face the loss of principal or capital, however, year after year of climbing markets tends to make people complacent. What many people don't realize is no matter what they invest in or how safely they think they have salted away their wealth or savings risk is always lurking.

The question remains how best to prepare for a economic meltdown. Values constantly change and the unfortunate situation of having your wealth in the wrong place at the wrong time can be devastating, the inability to access your funds can make the situation even more dire. It could be said that in some ways all of us are involved and playing this game whether we are aware of it or even want to be included. Another concern is the economic overlords have the power to change the rules and when this happens it generally is not to benefit you or me. During times of economic chaos, you can only hope you will not be one of those thrown under the bus. With much of the world facing down a road paved in promises that are economically unsustainable, it is likely many will be broken. Pensions and other payments granted to us in our later years are the kinds of promises that are at risk of not materializing or being cut.

How Will The Dominoes Fall?

Much of how things play out revolves around the issue of debt a subject of great importance to both lenders and borrowers, and again timing can mean everything when determining whether a creditor will totally default or force a lender to suffer a major write-down of their expectations. Debt is generally set to be paid over time and a balloon payment coming due at a time when money is difficult to borrow can be the kiss of doom. Inflation or deflation, as well as a big shift in interest rates, may determine the true winners or losers in this brutal game.

Going forward we find the size of the chips, and the order in which they fall is both unpredictable and does matter in determining how an individual's wealth is affected. The story of the gold miner who labored for years then gave up and walked away set things up for the next young lad who started in to hit gold in days and strike it rich highlights that being right is not always enough, the value of tenacity should not be underestimated, and timing is crucial. A bit of luck is also helpful in a world that has become a giant casino and our economic future often a game of chance, at stake, is just how much of our wealth we as individuals can protect. When we talk about contagion it is easy to imagine the dominoes falling, but have no doubt the direction they fall often determines which if any will remain standing. Expect both luck and caution to play a big role on our individual fortunes as we move through the financially violent period before us.

Friday, May 19, 2017

Enough about Tesla being worth more than Ford and all the other automobile producers that have many times its market share. Current supporters of its value even go so far as to claim it is really a tech company masquerading as an automobile company. It should be noted that J.P. Morgan analyst Ryan Brinkman welcomes margin improvements at Tesla and the reiteration of Model 3 timing, but said execution risks remain. He rates the stock underweight with a $190 price target, up from a previous $185. I and many other market watchers see both of these numbers as far too high.

In a note Brinkman recently wrote, “We continue to be cautious relative to the potential for a slower than guided start to Model 3 assembly, and newly believe that the potential for Model 3 pre-orders cancellations may increasingly become a point of investor concern.” Nothing tarnishes a brand faster than producing a lemon or product that becomes synonymous with failure. I hate to tell Tesla lovers that owning a Tesla could rapidly become uncool if when rolled out the Model 3 fails to live up to the high expectations many of those placing orders have for the car.

Model 3 May Fail To Tantalize Or Underwhelm

Tesla has repeatedly tried to lower expectations and reiterated that the model 3 is a downgrade from the model S but many of those on the waiting list may not fully comprehend exactly what this means. Do not rule out the possibility that once the aura surrounding Tesla leaves, reality may wash over those so eagerly awaiting their new toys and a main driver of sales vanish. In a world where few cars sporting the Tesla nameplate exist the car remains a novelty that garners the owner a bit of notoriety. So far the attention gained has been positive, however, if it were suddenly to turn negative not only would many owners lose a bit of bounce in their step but the value of their cars could drop like a stone.

As this is written we are forced to wonder just how much of a downgrade the model 3 will be and how it will be received. Many questions still exist as to whether its roll-out will be on time or delayed by a series of glitches and problems that often plague new models. If the actual car fails to tantalize buyers or leaves them underwhelmed it could be all over. One is born every minute refers to a fool or sucker. There's a sucker born every minute" is a phrase closely associated with P. T. Barnum, Buying stock in Tesla is the same as going to a casino, it will end with you being most likely a goat rather than a hero. Remember the companies Musk is involved with have been on the government dole.

Like many high-flyers before him, Elon Musk has a history of promising more than he can deliver which investors and the market has chosen to ignore. I have written several articles about Musk and Tesla not because I'm wowed by either but because they are both poster children of a market which I feel has discoupled from reality. Do not be surprised if looking back someday in the future we view Tesla's stock which continues trading at incredibly high multiples as a reflection of our historically low-interest rates and the luck of being in the "QE moment" rather than the company's financial success. Bears and those that doubted if the company could hold together ironically have pushed up the stock adding to the image that Musk lives a charmed life.

In the past, I and many others have pointed out the uphill battle Tesla is fighting and the many obstaclesthat could derail its success. In May of 2015David Stockman wrote; In a world saturated with excess automotive capacity and dominated by some of the most formidable engineering, manufacturing and marketing organizations on the planet—Toyota, BMW and Ford, to name just three–There is no way that an amateurish circus barker like Elon Musk will ever make a profit selling electric vanity cars to the 1%. Stockman went on to state, You might describe Tesla as $30 billion of capitalized hopium, but that would be too generous. In an honest free market, Tesla would have long ago been carted off to the chapter 11 junk shredder.

Oh, how sweet and challenging the auto industry is, like a fickle mistress it has those in its grasp always on their toes or they will suddenly find themselves crushed by their overconfidence. A marvelous example is how Ford in the 1950s ambitiously rolled out the car everyone was waiting for. Unfortunately, their ambition gave birth to the Edsel, whose name became synonymous with abject corporate failure and while the nascent brand was killed in 1959, its legacy lives on. The Edsel's short history makes a fascinating cautionary tale for anyone in business–not just the car industry. In the end, the name of Elon Musk may be added to a long list of bold men herald and declared to be "gods gift to business," only to find they flew too close to the sun only to crash and burn.

Footote #2; Below is a more recent article highlighting how Tesla's competitors have not been sitting on their hands or surrendered the electric car market to the upstart. A gruesome Tesla crash in Calafornia, production problems, growing debt, and the fact Tesla is burning through cash is causing investors to question Tesla's high stock valuation. The article below delves into these issues.http://Tesla Update - Model 3 Production And.Cash Burn Worry html

Tuesday, May 16, 2017

During April of 2016, I wrote; We should not wait until someone is gone to salute them in tribute. Life
is finite and at some point, we should acknowledge we are
nearing the end. Allan H. Meltzer, a distinguished monetary economist and historian and a
longtime professor of economics at Carnegie-Mellon Institute, died last week at the age of 89. While he had a long and productive life I only wish Allen had lived long enough to have seen he was right on what has been happening since 2008. An older lady often told me "she no longer bought green
bananas" as a way of saying she recognized this truth. In that spirit,
I'm writing about a person born in 1928 that while viewed by many
economists as
America’s foremost expert in monetary policy is little known by the
masses.

In the middle of
2013, I wrote "It Will All End Badly" where I stated that what I like about numbers is that when they are not jockeyed, jerked
around, and falsified they tend to tell the truth.
Continuing on this thought looking down the road
the numbers do not work, this is where Meltzer enters the story. Allen H
Meltzer is recognized for his wisdom and achievements in economics.
Meltzer is a professor of political economy at Carnegie Mellon
University and a
visiting fellow at Stanford University's Hoover Institution. He is also
the author of
the three-volume “A History of the Federal Reserve.”
For over 25 years he was the chair of the Shadow Open Market Committee, a
group that meets regularly to discuss the policy of the Federal
Reserve. Back then his mood was troubled “We’re
in the biggest mess we’ve been in since the 1930s,” he has been quoted
as saying “We’ve
never had a more problematic future.”

People have been forced into riskier assets because of low-interest
rates.When interest rates rise, as they will at some point,
the
value of these risky investments will decline, and these investors
will be hurt. Making things worse is the fact that interest payments on
the public debt will rise
increasing the budget deficit which has grown massively in past years. It is clear that prices in some sectors of the
economy have been rising rapidly and major distortions exist within the
marketplace. When the large "too big to fail" banks like Goldman and Bank of America
report they made profits in the market on roughly 95% of trading days in
2012 we have to raise an eyebrow. This is an indication that the game
is manipulated as no trader is that good.

Even back in 2013, Meltzer had not been a fan of recent economic policy for some
time, in a Wall Street Journal opinion piece on June 30, 2010, titled
"Why Obamanomics Has Failed" Meltzer wrote about how uncertainty about
future taxes and regulations was the biggest enemy facing future
economic growth. He goes on to say that the
administration's stimulus program has failed. Growth is slow and
unemployment remains high. The president, his friends, and advisers talk
endlessly about the circumstances they inherited as a way of avoiding
responsibility. Two overreaching reasons explain the failure of
Obamanomics. First,
administration economists and their outside supporters neglected the
longer-term costs and consequences of their actions. Second, the
administration and Congress have through their deeds and words
heightened uncertainty about the economic future.

Meltzer went on to say that most of the earlier spending was a very short-term response to
long-term problems. Part of the money financed temporary tax cuts, this was a
mistake because it ignores the role of expectations in the economy. Economic
theory predicts that temporary tax cuts have little effect on spending.
Unless tax cuts are expected to last, consumers save the proceeds and
pay down debt. Another large part of the stimulus went
to relieve state and local governments of their budget deficits.
Transferring a deficit from the state to the federal government changes
very little. Some teachers and police got an additional year of
employment, but their gain is temporary. Any benefits to them must be
balanced against the negative effect of the increased public debt and
the temporary nature of the transfer.

Peter Schiff says, printing money is to
the economy what taking drugs is to a drug addict. In the short term
it makes the economy feel good, but in the long run, it is much worse
off.
What was once the "long run" or "distant future"
may be getting very near. Soon the dollar and the American economy
will be nearly dead. I recently reviewed a book I read years ago, in
his book "A Time For Action" written in 1980 William Simon, a former
Secretary of the Treasury tells how he was "frightened and angry". In
short, he was sounding the trumpet about how he saw the country was
heading
down the wrong path. Looking
back, it is hard to imagine how we have made it this long without
addressing the concerns that Simon wrote about so many years ago. Back
then it was about billions of dollars of debt, today it is about
trillions of dollars.

Returning to Allen Meltzer he penned a piece that appeared in the Wall
Street Journal in May of 2014, in the article Meltzer gives his take on
where the economy is headed. I highly value his opinion, not only
because it is based on his long developed work and studies, but he seems
to have far less motivation to lie than many of those currently
involved in forming policies today. Meltzer wrote;

The U.S. Department of Agriculture forecasts that food prices will
rise as much as 3.5% this year, the biggest annual increase in three
years. Over the past 12 months from March, the consumer-price index
increased 1.5% before seasonal adjustment. These are warnings. Never in
history has a country that financed big budget deficits with large
amounts of central-bank money avoided inflation. Yet the U.S. has been
printing money—and in a reckless fashion—for years. The Obama administration has run huge budget deficits every year, which, together with the Bush
administration, has amounted to $6.7 trillion from 2006 to 2013. The
Federal Reserve financed almost $3 trillion of these deficits by
purchasing Treasury bonds and notes. The Fed has also purchased massive
amounts of mortgage-backed securities. Today, with more than $2.5
trillion of idle reserves on bank balance sheets, there is enormous fuel
for greater inflation once lending and money growth rises.

To avoid the kind of damaging inflation the U.S. experienced in the
1970s and early '80s, the Fed could raise interest rates, including the
interest it pays banks on reserves, inducing banks to hold most of the
$2.5 trillion of reserves idle. But interest rates high enough to
discourage borrowing and lending would likely send the economy into
another damaging recession.

Fed Chairwoman Janet Yellen recently admitted that the central bank doesn't have a good model of inflation. It relies on the Phillips Curve, which
charts what economist Alban William Phillips in the late 1950s saw as a
tendency for inflation to rise when unemployment is low and to fall when
unemployment is high. Two of the most successful Fed chairmen, Paul Volcker and Alan Greenspan, considered the Phillips Curve unreliable. The Fed's forecasts of inflation ignore Milton
Friedman's dictum that "inflation is always and everywhere" a result of
excessive money growth relative to the growth of real output. The Fed
focuses far too much attention on distracting monthly and quarterly
data while ignoring the longer-term effects of money growth. The
country's present dilemma originated in 2008 when the Fed properly and
forcefully prevented a collapse of the payments system. But long before
idle reserves reached $2.5 trillion, the Fed didn't ask itself: What
can we do by adding more reserves that banks cannot do by using their
massive idle reserves? The fact that the reserves sat idle to earn
one-quarter of a percent a year should have been a clear signal that
banks didn't see demand to borrow by prudent borrowers. The
Fed's unprecedented quantitative easing since 2008 failed to lead to a
robust recovery. The unemployment rate has gradually declined, but the
main reason is that workers have withdrawn from the labor force. The
stock market boomed, bringing support from traders, but the rise in
asset prices of equities didn't stimulate growth by inducing investment
in new capital. Investment continues to be sluggish. And some
side effects of the Fed policies have had ugly consequences. One of the
worst is that ultra-low interest rates induced retired citizens to take
substantially greater risk than the bank CDs that many of them relied on
in the past. Decisions of this kind end in tears. Another is the loss
that bondholders cannot avoid when interest rates rise, as they have
started to do. Accumulating data from the sluggish loan market
and the weak responses of employment and investment should have alerted
the Fed that the growth of reserves and the low interest rates haven't
been achieving much. Similarly, the Fed should have noticed in recent
years that instead of a strong housing-market recovery, not many
individuals were taking out first mortgages. Many of the sales were to
real-estate speculators who financed their purchases without mortgages
and are now renting the houses, planning to resell them later. Most
of all the Fed years ago should have recognized that the country's
economic problems weren't arising from monetary factors. Instead of
keeping interest rates low to finance deficits, the Fed should have
explained that costly regulation, increased health-care costs, wasteful
spending and repeated threats to raise tax rates were holding back the
recovery. Broadly speaking, the Obama administration has pursued a course the opposite of that taken by the Kennedy and Johnson
administrations in the 1960s (and the Reagan administration in the
1980s). Kennedy-Johnson enacted across-the-board tax cuts: Promoting
growth came first, redistribution later. By putting redistribution first
and sacrificing growth, the Obama administration got neither. Ironically,
despite often repeated demands for increased redistribution to favor
middle- and lower-income groups, the policies pursued by the Obama
administration and supported by the Federal Reserve have accomplished
the opposite. When the president campaigns in the midterm election, he
will talk about the relative gains by the 1%. Voters should recognize
that goosing the stock market through very low interest rates, not to
mention the subsidies and handouts to cronies, have contributed to that
result. We are now left with the overhang. Inflation is in our
future. Food prices are leading off, as they did in the mid-1960s before
the "stagflation" of the 1970s. Other prices will follow.

This post is not only in tribute to Allen Meltzer but to make clear that just because we have
muddled along putting band-aids on our economy does not mean that we
have done anything but postpone the day of reckoning, and in many ways,
we may have made it far worse. The time the Federal Reserve has bought
for
the country to come to terms with its many problems has been squandered
at a great cost. While many people say the economy is getting better
others like me who
are involved in business on Main Street all across America say this is
not true and that an ugly reality is only being masked by the easy money
and deficit spending policies we have today. While it is difficult to
time when certain events will unfold it is clear the direction we are
moving in.

Monday, May 15, 2017

While the doors are open it seems Washington remains "closed for business" and nobody has seemed to notice or care. This could be one of the reasons the stock market has continually made new highs as the economy struggles with multiple issues and faces an uncertain future. Seriously, even this could not explain wall streets disconnect economic reality, however, it is difficult to argue with the fact America's capital is locked in a dysfunctional mindset. Anyone who thinks Obamacare is well on its way to being repealed or replaced by a "better plan" is delusional. Other than a celebration when legislation claiming such a feat passed the House little of substance is in the works.

Just as remote as a "fix all for healthcare" is the likelihood of a tax plan being signed into law anytime soon that will simplify or solve are budget woes. This has done little to slow the advances of stocks on wall Street because in the eyes of those buying stocks such a deal is in the bag. They are oblivious to the reality no intelligent plan has been written or is moving through the halls of congress. The fact is we cannot cut taxes while increasing spending at the same time and not explode an already massive national deficit. The odds of getting a complicated tax reform bill through a polarized and divided congress are nil. In fact, most of the developed countries across the world are in exactly the same boat and upcoming elections hold little promise that things will be sorted out soon.

Trump Heads Off On Multi-Nation Trip

Thank goodness for the distractions that allow us to take our eyes and minds off the business of making the necessary structural reforms to move forward. The recent firing of FBI Director James Comey by President Trump can be considered one of those distractions. While few Americans were love
struck over Comey this has stirred up a hornet's nest and energized
Trump's critics. Only so many hours exist in a day and when they are spent or wasted in speculation the bottom-line is if nothing is getting done, Washington might just as well be closed for business.

It is difficult to believe the productivity of Washington could drop any lower, and while our elected officials busy themselves with calling for further investigations and making promises of getting to the bottom of this America putters along on autopilot. The flavor of the day is same as it was yesterday and the year before, nothing has changed. The politicians and Washington elite continue dithering away their time as well as the money of the American taxpayer and even that of future generations. With matters under control and having completed his strenuous first 100 days in office President Trump is about to head off on a global fly about to meet with various world leaders which should result in more of the same.

The days of "Hope and Change" are behind us and we are firmly on the path towards making America great again, unfortunately, the message has fallen on deaf ears when it comes to our elected officials in Washington. Tonight I will raise my glass and toast the cynical and skeptical Americans scattered across this great land for again they are well on their way to being right about how nothing really gets done until the last minute and even then if delay is an option it will be exercised. To top things off tonight as I get ready to post this article the White
House has gone into damage-control mode after a report that Trump
revealed classified information in a meeting with Russian officials last week. Ironically this may be as good as it gets.

About Me

Bruce Wilds is a contractor that owns real estate in the Midwest, his holdings include apartments and office complexes. He is anchored to reality and the economy as he maintains, designs, and leases buildings. This has made him keenly aware of rapidly changing lifestyles, this blog incorporates many of the experiences and knowledge from his hands-on business style, extensive travels, and studies of history, politics and economics.